Guest Post: The TAZ, Pirate Utopias and YouTube’s Obsession with Safe Harbors

Guest post by Chris Castle

“[A]s you begin to act in harmony with nature the Law garottes & strangles you – so don’t play the blessed liberal middleclass martyr – accept the fact that you’re a criminal & be prepared to act like one.”

Hakim Bey from “T.A.Z.: The Temporary Autonomous Zone, Ontological Anarchy, Poetic Terrorism”

YouTube’s CEO Susan Wojcicki is frantically wheeling around Europe this week in a despairing effort to establish a US-style safe harbor in Europe and undermine Article 13, the Copyright Directive for a Digital Single Market.

Let’s understand that the very concept of a safe harbor for YouTube has its roots deep in the pirate utopias of Internet culture–a fact that may get overlooked if you aren’t a student of the Silicon Valley groundwater.

The Value Gap really owes its origins to the anarchist Peter Lamborn Wilson who wrote the seminal text on pirate utopias under the nom de plume“Hakim Bey” entitled “The Temporary Autonomous Zone, Ontological Anarchy, Poetic Terrorism” (1991) or, as it is known perhaps affectionately in hacker circles, simply “TAZ.”  I for one am not quite sure what makes “poetic terrorism” different from unpoetic terrorism, utopian terrorism, anarchic terrorism, or just plain old terrorism, but it may explain why YouTube just can’t bring itself to block terrorist videos before they find an audience.

But the TAZ helps illuminate my own more truncated term for the Value Gap–the alibi. An alibi for a pirate utopia where the pirates run cults called Google and enrich themselves from the prizes they go a-raiding.

In the early days of online piracy there was a fascination with locating servers in some legal meta-dimension that would be outside of the reach of any law enforcement agency. Sealand, for example, captured the imagination of many proto-pirates, but Sealand is a little to clever to put themselves in a position requiring evacuation by the Royal Navy before the shelling begins.  So Sealand was ruled out.

Instead, Google–largely through YouTube–created its own pirate utopia through manipulation of the DMCA safe harbor, one of the worst bills ever passed by the U.S. Congress–and that’s saying something.  Google busily set about establishing legal precedents that would shore up the moat around their precious TAZ.  None of Google’s attacks on government should be surprising–anarchy is in their DNA.  As former Obama White House aide and Internet savant Susan Crawford tells us:

I was brought up and trained in the Internet Age by people who really believed that nation states were on the verge of crumbling…and we could geek around it.  We could avoid it.  These people were irrelevant.

And “these people” were stupid enough to give a safe harbor to protect the TAZ.  Because here’s the truth–the safe harbor that has made Google one of the richest companies in the world while they hoover up the world’s culture actually is the quintessential temporary autonomous zone.  It only exists in a changeable statute and the judicial interpretations of that statute, whether the DMCA or the Copyright Directive.  And like HAL in 2001: A Space Odyssey, they’re not going to allow that disconnection without a fight.

But YouTube’s CEO Susan Wojcicki will not be singing “A Bicycle Built for Two” as she flails about in the disconnect of YouTube.  Her basic argument is that “imposing copyright liability is destructive of value” for “open platforms” like YouTube.  “Open platforms” bear a striking resemblance to the TAZ, yes?  Ms. Wojcicki , of course, purveys a counterintuitive fantasy because unauthorized uses for which copyright liability accrues is what destroys the value of the infringed work.  What Ms. Wojcicki is harping about is how copyright infringement destroys value for YouTubeand its multinational corporate parent, Google.  This is what happens when stock options invade a pirate utopia.

Not only has she got it wrong, but what she is actually whingeing about is the threat posed to her YouTube pirate utopia by the Copyright Directive and the united creative community.  And as HAL might say, the YouTube mission is too important for me to allow you artists to jeopardize it.

 

At This Point We Have to ask Ourselves: is Google Opposed to Article 13 or the Nation State Itself? PT 2

In Part I I outlined a basic history of internet exceptionalism, and then noted that when this pernicious notion is combined with techno-determinism you end up with something I call “internet imperialism.”  Fundamentally internet imperialism challenges the legitimacy of representative governments and tries to unwind 400 years of the liberal democratic order, by removing vast swaths of human social and commercial activity from purview of institutions legitimized by the consent of the governed.

I presented the choice we face as this:

  • Do technology companies and their allies sit at the apex of power and determine what sort of world we live in? The boundaries and limits of our government, our commerce and our liberties defined by their algorithms and business models?  Government is simply a janitorial service that cleans up the negative externalities.
  • Or do democratic institutions sit at that apex?

This is evolving as I write this, I’m honestly not exactly sure where this is going.  Over the next few blogs I want to examine the current battle between tech companies (predominantly Google), and the European Union over the proposed Copyright Directive. This policy conflict is the perfect laboratory to study methodologies used by technology companies and their proxies as they attempt to undermine the ability of representative governments to impose such laws within their own borders. Specifically they do this by:

  • cynically pushing a fiction that “cyberspace” has its own geographical space that is outside national geographic boundaries;
  • questioning the legitimacy of (non-pliant) governments by openly courting centrifugal forces that threaten those governments, including separatists, far right nationalist parties and extreme voices on right/left;
  • Intimidating democratically elected officials by activating online mobs, sometimes real but largely artificial (“cyberturfing”); and
  • Spreading disinformation using proxies while simultaneously denying use of such proxies (“little green men“).

All of these together reduce a government’s will to enforce national laws in “cyberspace,” effectively reducing the power of that national government and allows tech companies (especially Google) to gobble up virtual territory that was once the domain of a representative governments.  This is a terrible prospect.

But in order to do this I have to first explain how we got here. How this ideology was baked into the commercial internet from the very beginning.

A Declaration of Independence of Cyberspace 

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This is the Ur document.  Published in 1996 by John Perry Barlow (Grateful Dead second string lyricist) and the founder of the Electronic Frontier Foundation. He presented this from that cradle of hippy populism, Davos Switzerland as part of the 24 Hours in Cyberspace project.  As Wikipedia notes it explicitly rejects the applicability of government, all government to the internet.  Many people at the time (probably myself included) thought this was a “neat idea,” but largely a rhetorical exercise. I’m fairly certain only the glassy eyed true believers thought this was a serious idea at the time.

Non-serious, because it specifically declares that there is no consent of the governed in cyberspace nor is there likely to be one. Most serious people give up their anarcho-capitalist fixations once they get out of college or go someplace ungoverned like Somalia or tribal regions of Pakistan.

John Perry Barlow Osama Shirt

John Perry Barlow in OBL shirt. Photo Joi Ito Creative Commons license

“We have no elected government, nor are we likely to have one, so I address you with no greater authority than that with which liberty itself always speaks…”

and

“Governments derive their just powers from the consent of the governed. You have neither solicited nor received ours. We did not invite you. You do not know us, nor do you know our world. Cyberspace does not lie within your borders. Do not think that you can build it, as though it were a public construction project. You cannot. It is an act of nature and it grows itself through our collective actions.”

I’m gonna dismiss the obviously pre Hobbesian reference as a mistake (“act of nature”) and unpack the two marginally more serious notions put forth here.

  • Cyberspace is a place, and
  • Liberty itself replaces institutions of governance for they are incompatible in cyberspace.

 Is Cyberspace a place?  No.

Senator Ted Steven (R, Alaska) was roundly mocked when he described the internet as a “series of tubes.”  Public Knowledge a Google funded NGO that for all practical purposes is a public policy arm of Google, led the mocking of Senator Stevens.  According to wikipedia: “On June 28, 2006, Public Knowledge government affairs manager Alex Curtis wrote a brief blog entry introducing the senator’s speech and posted an MP3 recording.” This later became an early internet meme reaching its peak when John Stewart of the Daily Show sarcastically adopted the language. Google later buried “easter eggs” in various products referencing the “series of tubes” statement.  In the framework of semiotics, “series of tubes” became a second order signifier of technological illiteracy.

The problem is that Senator Stevens was more right than those who mocked him.  The notion that Cyberspace is a place is the sort of idea that brings to mind the George Orwell quote:

“Some ideas are so stupid that only intellectuals believe them.”

Cyberspace can not exist without physical infrastructure.  And where is that infrastructure?  As proposed by Barlow, Cyberspace can not exist without the human mind which obviously requires humans.  Where do those humans live? The notion that someone is not subject to national laws and authority of the state when “in cyberspace” is not just a bad idea, but leads to horrible things like sex trafficking of minors with impunity.  (See SESTA/FOSTA legislative debate).

The technology industry billionaire’s obsession with sea-steading (platforms in international waters) and data havens is telling.  Many technologists see the storage of data beyond the reach of national governments as a key to the kabuki that “Cyberspace does not lie within your borders.

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A barge built with four levels of shipping containers is seen at Pier 1 at Treasure Island in San Francisco, Photograph: Stephen Lam /Reuters

Google went so far as to build what appears to be floating data barges for some such purposes. As CNET reported in 2013

“It looks like Google has been working on an oversize secret project on San Francisco’s Treasure Island. A water-based data center? Could well be.  “

I was not inclined to believe the wilder conspiracy theories about Google’s data barges. Data centers require enormous amounts of cooling.  Seawater is generally cool.  Then Google came up with an implausible cover story for the barges: floating Apple Store like mobile exhibition space for Google Glass.  Shortly after floating (no pun intended) this explanation Google scrapped and sold off  the barges.  Every time I think I’m an idiot for putting on a tin foil hat when examining Google motives it turns out I needed two. As a result I think it is plausible that those barges really were an attempt at “geeking around the nation state” in order to remove certain operations of the internet giant from purview of national governments.

Is Iceland Cyberspace and why was Lawrence Lessig there?

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Screenshot from Julian Assange’s proposal for data haven 2009 Chaos Communications Congress. Iceland was the preferred location for the Pirate Utopia. 

Then there is Iceland.  Don’t get me wrong. I like Iceland. Icelandic people are pretty much still Vikings.  My last Icelandair pilot insisted on trying to land in Reykjavik despite the weather.  He/she did three (?) “go-arounds” before finally landing the plane in a gale.  After go-around two, most non-viking passengers would have happily gone back to BWI.

Then again, Icelanders eat whales and a slim majority of the population still believe in elves. It’s therefore a pretty trippy place and if there were one country that could be the real world location of Cyberspace this could be it. The government wants to be “The Switzerland of Privacy” as if being Swiss in the secret banking/money laundering sense is a good thing. This is of course what Julian Assange proposed in 2009 after Iceland’s currency collapsed. Yeah that’s another guy you want to listen to when trying to rebuild your country. The country now has some of the toughest “data privacy” laws in the world. 2016 elections put the Pirate Party in a position to form a governing coalition (they declined). But as a result Iceland is essentially now piracy/dark web haven. Or a Temporary Autonomous Zone (TAZ for short) if you prefer the terminology of the hacker underground. Though most hackers don’t realize TAZ is a theory developed by anarchist and pedophilia advocate (yes you read that right) Peter Lamborn Wilson.

Iceland is now a place where certain technology companies services sit outside the reach of the national government.  Which is probably fine if you work at one of Iceland’s data centers. Not so much if you are a victim of cybercrime (or real crime) perpetrated by organizations using these data centers.

Lately Silicon Valley’s favorite professor (and presidential candidate) Lawrence Lessig has been mucking about in Iceland claiming to “help” the citizens create a new constitution that among other things would essentially permanently cede the internet to private companies. It’s a very weird situation. It’s not clear that anyone (especially Lessig) really has a right to force a new constitution on the Icelandic parliament (they rejected it once). No wonder that Silicon Valley libertarian and seasteading proponent Peter Thiel gave the ostensibly “progressive” Lessig $500,000 for his US super PAC.  This is  Sealand all over again.  Right down to the data havens. Instead of pirate radio Iceland hosts pirate websites.

A Wall Street Journal article concerning Lessig’s political ambitions and strange bedfellows noted this:

Mr. Lessig’s quixotic approach reflects a common viewpoint in Silicon Valley: that the political system is broken. But while some libertarians in Silicon Valley want to work outside of institutions, Mr. Lessig is aiming to reform the government from within.

WTF does “work outside of institutions” mean.  Presuming these institutions are our democratic governments?  Don’t dictators and autocrats “work outside of institutions.”.  Why would anyone say this shit out loud?

The fact that Lessig is funded by many folks who don’t believe in the system and want to “work outside” the system, by which they mean liberal democracies, led me to brand him the “Manchurian Candidate” in his 2016 run for the US presidency.

Privacy Absolutism

This all considered, privacy arguments are simultaneously the best and worst arguments for an independent cyberspace beyond the reach of national institutions.  Who wants the NSA reading their mail? Unencrypted internet traffic has helped the PRC tighten control of the Chinese population.  I get it. Believe me.

But on the other hand, absolutist data privacy permanently beyond the reach of government also allows all sorts of cybercrime and terror to permanently thrive and stay beyond the reach of the nation state.  There are very real negative externalities associated with this notion. We’ve had quite a bit of experience with this already. It’s called the Dark Web.  Few (if any) Silicon Valley and Harvard elites advocating for absolutist privacy have ever confronted these negative externalities in real life. Yes in an abstract statistical easy to ignore manner they may have read about the negatives of dark web drug sales. But after personally being faced with the deaths of two young men (still in their teens) likely because of substances they bought on the dark web it’s no longer abstract to me.  The tangible grief of the parents, brothers, sisters and friends is something every internet freedom absolutist should be forced to confront.  As a nation we’ve always balanced personal privacy with the need to prosecute criminal gangs involved in these enterprises. What is so different about the internet age that forces us to throw that balance away?  I mean aside from cynical techno-determinist ideology?

Absolute privacy is a hard position to defend if you believe in protections that nations states provide. If you don’t believe in nation states and the protections they provide to victims it’s really easy to stake out an absolutist position on privacy.

What is liberty?

“We have no elected government, nor are we likely to have one, so I address you with no greater authority than that with which liberty itself always speaks…”

This just doesn’t mean anything.  It’s pseudo intellectual bullshit that sounds like it means something.  I’ve gotten up from my desk a dozen times cause it pains me to explain this notion. Stupid.  But let me push on…

First, I don’t want to get into a debate about political anarchism. I’ve already indicated I think it’s a completely childish notion. You will never convert me. And this blog is directed at those who also think it’s a stupid idea, but didn’t know that when they signed up for “free internet ideology” they also signed up for some sort of corporate anarcho capitalist hippy bullshit. (Or worse freaky Julian Assange/Peter Lamborn Wilson “Temporary Autonomous Zones.”)

If you do argue with me about anarchism I will only respond with grammatically incorrect AnCap memes. Like this:

Anarcho cap when there

Fundamentally Barlow and his ilk are proposing not a “free” cyberspace but an ungoverned cyberspace.  These are not the same thing.  We’ve spent the last 400 years trying to define freedom and the free society.  We still haven’t perfected it but the consensus is that freedom provides protections for individual rights.  People doing whatever they want is not freedom.

There is a quote attributed to many people generally phrased as such:

“Your right to swing your fist ends at the tip of my nose”

Someone or something has to be there to stop that fist to prevent the violation of your right to not be punched in the nose. Cause it’s going to happen (Hobbes) and that authority should have the consent of the governed (Hobbes and Locke). If there is no such authority you have an ungoverned cyberspace. Not a free cyberspace. Why do we have to learn this all over again? Fucking internet freedom stupidity.

Given a serious amount money, weaponry and a loyal armed militia I could probably go into an ungoverned area like Somalia or desert regions of Anbar province Iraq live a pretty good life and do whatever the fuck I want. Is this liberty?  Am I free?  Are the other denizens of this ungoverned space free?  I don’t think so. Certainly the folks with the rifles pointed at them are not free. This is Barlow’s Cyberspace.  It’s also the pre Hobbesian state of nature.  It’s absolute hogwash and it should be seen for what it was and still is:

A cynical attempt to pawn off the negative externalities of ungoverned computer/social networks onto the public.  Privatized gains for those operating the networks. Socialized losses for the rest of us.

Fake news, cybercrime, copyright infringement and data breaches like Cambridge Analytics etc were baked in from the very beginning. We were always gonna pay the price.  Silicon Valley was always gonna reap the profits.

I’ll pick up here in part III

At This Point We Have to ask Ourselves: is Google Opposed to Article 13 or the Nation State Itself? PT 1

Part 1 of 3 part series.

“I was brought up and trained in the Internet Age by people who really believed that nation states were on the verge of crumbling…and we could geek around it. We could avoid it [The Nation State]. These people were irrelevant.” -Susan Crawford  Former President Obama’s Special Assistant for Science, Technology, and Innovation Policy, speaking at Personal Democracy Forum 2010 New York City.

It is often an awkward moment when I present the statement above to my (generally liberal) musician friends and academic colleagues and then tell them it came from an Obama administration official. Yikes! Is usual reaction. To be fair, the statement itself is not the problem. It is profoundly prescient. The problem with Crawfords statement (watch the video) is she clearly thought “geeking around” the nation state was a good thing at the time! It is only in a post Cambridge Analytics world this statement seems quite sinister. Although Vladmir might disagree.

Obama was elected on promises of change from politics as usual.  Like many other people I took him at his word and voted for him.  And in many ways he fulfilled his promises.  Obama cobbled together a very different governing coalition than previous presidents.  One key component of his coalition was the tech industry writ large. Not just the executives and employees of giants like Google and Facebook, but also the assorted camp followers: wild eyed tech evangelists; smooth talking VCs; cyberlaw professors; open source software enthusiasts; tech policy wonks; big data gurus; NGOs, TED talkers; futurists; cyberspace lawyers; free culture radicals; pirates; cyber libertarians; and assorted cranks.

As a result Obama (like his predecessors Bush and Clinton) took a very neo-liberal approach to the technology industry.  Hands-off the tech industry and in exchange the billionaires in Silicon Valley would make everyone’s lives better. Innovation will lift all boats. As someone with classical liberal tendencies I can’t say that this was a wrong decision. At least when you didn’t know then what we know now.

Now it looks stupid.  But back then? It gets a pass.

The problem:  in short order this part of the Obama coalition coalesced into a lobbying superpower in its own right. A strange mix of anti-establishment lefties, right libertarians, social progressives and lots and lots of corporate money. Google in particular used that money to shape the coalition agenda into a something that perfectly supported its business model. Yet never threatened it. For example, when Barry Lynn a researcher at the Google funded New America Foundation got out of line and praised the EU for fining Google $2.7 billion for violating antitrust laws? New America Foundation fired him for threatening their funding sources. EFF a “digital rights advocacy group” has received millions from Facebook and Google and regularly provides PR and legal cover for these companies. Almost a week passed before they commented on the Cambridge Analytics scandal.  Good dog. Very good dog.
Of course this is all very predictable and what we would expect in corporate policy circles.

However a couple years after Susan Crawford made her speech, something radically changed.  It started with a bill designed to slow online piracy SOPA. This bill emerged from years of bipartisan wrangling.  In EU a trade agreement, ACTA enjoyed similar consensus support.  Both were moving towards passage when they were met with what appeared to be fierce grass roots opposition.

In the US the campaign was largely directed by Google lobbyists (Marvin Ammori and Glen Echo Group) and lavishly financed through an opaque non-profit 501 (c) 3 called Fight For The Future. The campaign relied on simple hashtags like “Don’t Break the Internet.” Simple webforms allowed users to share, tweet, email and even phone legislators. Similarly in the EU an online campaign was created to block ACTA. Thousands eventually took to the streets in Poland.

It wouldn’t be an online campaign if there wasn’t also some wild disinformation.  And the anti-SOPA campaigners did not disappoint. The most shameful moment was Harvard Law Professor Jonathan Zittrain’s “Free Bieber” moment on the Steven Colbert show Dec 1st 2011.   Zittrain used Justin Bieber’s breakthrough on YouTube singing covers as his primary example and falsely claimed that Bieber would have gone to jail if SOPA had been law. The problem is that this claim emerged from a website run by Google lobbyist Ammori and had been totally debunked long before Zittrains appearance. Judging by Zittrain’s other comments around the same time it would appear he was aware his claim had been debunked and was specious when he made it.

 

Unfortunately these kinds of disinformation techniques worked. When President Obama came out against the bill on Jan 16th 2012 the bogus “censorship” narrative was in the groundwater. Obama gave it real credence. On the 18th Google and dozens of other websites “blacked out” and provided interactive links that allowed repeated robo calls to congress. The results were predictable. Congress was flooded with unprecedented number of phone calls and emails. Think about it. The most popular website on the planet (Google search) directed all their web traffic at the US Congress with a misleading bit of click bait “Don’t censor the web.”  It was essentially a distributed denial of service attack on the legislative branch. And it worked. Jan 20th 2012 the bill was withdrawn.

TAIL WAGS DOG

 

And that’s when it all changed. The tail discovered it could wag the dog. While the Obama administration may have thought they were being helped with “their” policy by the tech industry, the tech coalition saw it completely differently. They immediately declared themselves sovereign.  In 2012 there was no more representative voice of the corporate internet industry than The Net-Coalition. It was basically Google with some grudging support from Amazon and everyone else dragged along at gunpoint. In July 2012 Katie Barr VP of The Glen Echo Group on behalf of the Net-Coalition organized this panel (above) in which they ask the primary question “Is the Internet America’s Third Party?”  Among the proposed sub-questions was this gem: “We’ve done a lot of self-congratulating, but what do we do now?”

Fine but…Who’s “we?”

I mean who elected the people who declared themselves “The Internet?” Look at the panel. All but one is a lobbyist. What is this new kind of political entity? Is it really new? We’ve always had lobbyists.  If “The Internet” is the thing that got real pissed off about SOPA, it is essentially a lobbyist directed online mob.  Is that better than the representative democracy we have now? If we put the online mob in charge of everything won’t it just rename everything Boaty McBoatface? I’m being silly now.

Yet, doesn’t this seem like the scenario Crawford was talking about in the opening quote? The nation state is portrayed as crumbling. A “geeking around” the nation state is proposed with “the internet” (whoever that is) as its “third party” replacement. Sure a weak tea version. A sort of bubbly corporate billboard on the road to Little Dystopia.  But when you combine it with the techno-determinism espoused by many of the technology leaders you get something quite nasty. You find yourself on the road to Big Dystopia.

TECHNO-DETERMINISM

Without repeating 40 pages of my doctoral dissertation, techno-determinism as preached by silicon valley is the notion that technology is an irresistible force that shapes society.  We are powerless to even modify the coming innovations and thus we must shape our society, governments, institutions, laws and even our morals to match the technology. As my colleague East Bay Ray noted, techno-determinism is “a form of nihilism” that “demands we modify social norms, longstanding ethical principles and even human rights guarantees to match new technology rather than the other way around.”

As an example. The wave of industrialization in he 18th century led to the employment of children in the mills.  Small stature and the ability to get into spaces that full grown men couldn’t, made children valuable workers.  Essentially a technological determinist would argue we adapt our society and shed our moral outrage at the employment of children. We didn’t.  We banned the child labor and innovation progressed along nicely.

Humanity 1
Techno-Determinists 0

But this is no longer the 19th century and techno-determinism has evolved. There is now a pseudo religious quality to techno determinism in Silicon Valley.  It comes in two forms. The first is the so-called Singularity.  This is a notion that was popularized by the science fiction writer Ray Kurzweil. Kurzweil is also the chief of engineering for Google.  From Wikipedia:

Kurzweil describes his law of accelerating returns which predicts an exponential increase in technologies like computers, genetics, nanotechnology, robotics and artificial intelligence. Once the Singularity has been reached, Kurzweil says that machine intelligence will be infinitely more powerful than all human intelligence combined. Afterwards he predicts intelligence will radiate outward from the planet until it saturates the universe. The Singularity is also the point at which machines intelligence and humans would merge.

Kurzwil is not just some outlier Google engineer with some wacky ideas on the side.  Google and other Silicon Valley companies fund his Singularity University.

The second form of this pseudo-religious techno-determinism has less of a Millerite quality but is still pernicious. Essentially it posits it is a venal sin to stand in the way of technological innovation because those innovations may produce improvements for humanity down the road. Standing in the way of innovation causes humanity to suffer. “Forgive me Father for I have sinned. I have attempted to enforce my constitutional copyright protections.” This second form permeated the Clinton, Bush and Obama administrations and still permeates technology bureaucracies at the federal level.  Again this is a notion that on the surface seems harmless. It sort of jibes with longstanding neo-liberal and classical liberal ideals.

So what is the problem?

Internet Imperialism

“Google is the first imperialist power of the 21st century”- Anonymous comment on Trichordist.

When one combines this pseudo religious techno-determinism, with naked political ambition you get something that I call Internet Imperialism.  I’ll explore this more in part II.  But Internet Imperialism is the notion that the Internet is outside of the realm of national or even international law.  This might have seemed harmless or poorly thought out hippy bullshit when this was first proposed by EFF founder John Perry Barlow in the Declaration of Independence of Cyberspace. At the time the Internet seemed like undiscovered territory. The internet was a few hobbyists using dial up modems chatting via BBS.  What was to be lost if Barlow and his corporate-funded EFF cronies declared it independent?

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A Declaration of Independence of Cyberspace.  Internet Imperialism can look like harmless hippy bullshit.

Now virtually all human interaction and much of the economy transits the the internet.  Internet Imperialism reaches back and pulls large portions of our lives into a system that lacks the consent of the governed. That is a real loss.  Do we really want that?

My contention is that internet companies in coordination are aggressively attempting to limit the scope of our democratically elected governments.  We are allowing the vast internet-industrial complex to whittle down the authority of our national and even trans-nation institutions by removing much human activity from the scope of governance. We are losing sovereignty, virtual territory to unelected unaccountable private corporations. How are we any different than China in the 19th and early 20th century? Are national institutions being slowly dismantled without are consent?  Tellingly much of the campaigning resembles hybrid information warfare.

The battle lines are clearly defined now:

  • Do technology companies and their allies sit at the apex of power and determine what sort of world we live in? The boundaries and limits of our government, our commerce and our liberties defined by their algorithms and business models? Government is simply a janitorial service that cleans up the negative externalities.
  • Or do democratic representative institutions sit at that apex?

It’s as if we are undoing the enlightenment. Do we need to dig up John Locke and reanimate him through memes and gifs so folks understand the fundamental importance of the consent of the governed?

Further, whether they consciously intend it or not the internet-industrial complex is undermining western democracies in exactly the same manner that hostile foreign authoritarian governments have attempted to undermine the west for decades. Shouldn’t that freak us all out?

In part two I will explore this further using the corporate campaign against EU Article 13 as the case study.  As I will show the anti-article 13 campaign seems specifically designed to block a law by limiting EU authority.  Even more disturbing, there is also circumstantial evidence that they pandering to centrifugal forces on the far right/ far left that seek to break the EU apart.

*Correction.  A earlier version of this blog implied ACTA was a statute rather than a trade agreement.

 

 

The Values Gap: CD Baby Shows that the Safe Harbor is a Privilege to be Respected and Not an Alibi to be Cheapened

by Chris Castle, from Artist Rights Watch

It’s hard to believe that after a good ten years of being called out, YouTube still–still–cannot manage to stop neo-Nazi and white supremacist material from getting posted on its network.  We’ve been calling out YouTube on MusicTechPolicy and the Trichordist for these inexcusable failures again and again and again.  And yet they keep recycling the safe harbor as an alibi–and they’re doing it again in Europe on Article 13.

I can understand that YouTube doesn’t want to “censor” users and there may be close cases from time to time.  For example, I could understand why YouTube CEO Susan Wojcicki might not want to take down videos from Seeking Arrangement that encourages young women into a “sugar daddy” relationship to pay for college and health care.

Sure, one of her Google colleagues was murdered by a woman he met through Seeking Arrangement.  Maybe Seeking Arrangement is a close case, particularly for a company that opposed the Stop Enabling Sex Traffickers Act.

But you know what’s not a close case? It’s right there in the title of the song–“Who Likes a N—“.  You would think that one would get picked up in a simple text filter of debased language.  But it wasn’t ten years ago and it still isn’t.  Not a close case.

UPDATE:  Author’s note–this YouTube video has been taken down and the account deleted–AFTER this post.

And then there’s “Stand Up and Be Counted” by the White Riders.  It’s not that hard to figure out by listening to any of the many versions of this song that it’s a recruiting song for the Klu Klux Klan.  And it’s not that YouTube doesn’t know it–this version of the hate song has clearly been filtered by YouTube–oh, sorry.  Not by YouTube, but by the “YouTube community.”  But why is it that a KKK recruiting song doesn’t violate YouTube’s terms of service if it doesn’t shock Susan Wojcicki’s conscience?

White Riders

David Lowery called out YouTube and CD Baby for allowing hate rock to be distributed on their platforms.  Within hours, CD Baby pulled the account.  But not YouTube.

Let’s understand a couple things.  First, this is not hard.  The Anti Defamation League and the Southern Poverty Law Center have actual lists of these bands.  Both MusicTechPolicy and The Trichordist have been hammering this issue for years.  Simple word searches could accomplish a large percentage of the task–the N word, KKK recruiting and images of Adolph Hitler are not close cases.

And let’s understand something else.  When users post movies, television shows and recorded music on YouTube, all of those materials have gone through some kind of legal review for standards and practices.  That doesn’t mean there’s no fair use or that there are no parodies.  It does mean that a human has thought about it because free expression is a judgement call.

Free expression is deserving of human examination.  You cannot create a machine that will do this for you.  You cannot rely on crowd sourcing to stop all uses of these vile terms and images–because in every crowd there’s someone who thinks it’s all just fine.  That’s why they’re called mobs.

YouTube, Facebook and all the Article 13 opponents actually are using a complete spectrum of review.  The problem is that they are cost shifting the human review onto artists and to a lesser extent their users for two reasons.  First and foremost is that they hope not to be caught.  That’s what the safe harbor is really all about.  The value gap is just a part of it–the other part is the values gap.  How do these people sleep at night?

But I firmly believe that the real reason that they shift the human cost onto those who can least afford it is because they’re too cheap to pay for it themselves.  They are willing to take the chance because getting caught so far has been a cost of doing business.

The real cost of their business is the corrosive effect that they have on our discourse, our families and our children.  There has to be a way to make YouTube responsible for their choices–and CD Baby showed this week that it’s not only possible but necessary.

If YouTube and their paid cronies want to try to convince legislators that they deserve special protection, they need to live up to the standard that CD Baby set this week  And they need to do that before they get any further special treatment.

As we’ve said for years, the safe harbor is a privilege not an alibi.

Does YouTube Underpay Artists 13 Billion a Year? Understanding YouTube’s Article 13 Freakout

 

Desperate times for YouTube. CEO Susan Wojcicki is currently organizing a Childrens Crusadeagainst EU MEPs by urging YouTubers (mostly US teens) to “take action” to protect her $772 billion dollar company’s swollen profits. You see the EU just proposed guidelines (article 13) requiring platforms like YouTube to stop hiding behind its users and pay musicians fairly.  She thinks that is an outrage and is spreading wild disinformation.

Seems batshit crazy to enlist children in a multinational corporate lobbying effort, until you figure out just how much YouTube is cheating musicians.

A rough calculation suggests YouTube is shorting musicians at least $13 billion a year.   It’s probably way more.  We can’t know the exact amount but it’s pretty easy to figure out the lower range.   Spotify with 160 million users in 2017 paid out at least 2.225 billion in royalties to rights holders (It’s probably a little higher). That’s around $13.90 user. YouTube provides the same service (except with video) and CEO Susan Wojcicki says YouTube has 1 Billion MUSIC users a month. 

So even at Spotify’s low rates that means YouTube should pay $13.9 billion a year.  But YouTube paid less than $500 million to music rights holders last year. The entire US recorded music industry in 2017 was $8.7 billion.  That’s a lot of missing money.

This is Google: Second largest corporation on earth, manipulating children to protect one of the biggest corporate rip-offs in history. Disgusting.

 

 

 

Copyright Directive Opponents Getting Band Back Together, Announce European Tour- Guest Post by Volker Rieck

This is a guest post by Volker Rieck. The article has been translated from German and originally appeared in the Frankfurter Allgemeine Zeitung. Link here.  We took liberties by changing the title of article for the English version.  Other minor phrasing has also been americanized. – David Lowery

After the manipulation is before the manipulation

On 12 September 2018, the EU Parliament voted on the proposed Directive on Copyright in the Digital Single Market. The entire summer of 2018 was characterized by a gigantic lobbying assault as the directive’s opponents resorted to “asymmetrical” lobbying means and bombarded EU parliamentarians with avalanches of emails and floods of tweets in a manner resembling the handiwork of a grassroots movement. (ed. note:“resembling” is the key word here). In the end EU parliamentarians did not buy the notion the opposition was purely organic grassroots movement and passed the directive. In fact, the spamming of the parliament may have backfired.

Nevertheless, immediately after losing the September vote, the opponents of the directive marshaled their forces to sketch out how they could influence the trilogue process of negotiations on the legislation between the Council of the European Union (the member states), the EU Commission and the EU Parliament.

“It is coming from Google”?


On 21 September 2018, the fifth “Das ist Netzpolitik!” [“This is net politics!”] conference took place in Berlin. One of the speakers was Julia Reda, the sole representative of the Pirate Party in the EU parliament. At the conference – addressing her supporters and requesting that they write to EU parliamentarians – she said:

“They need to get a sense that this is relevant for their constituencies. Then they won’t believe it is coming from Google.”

Now, it is possible to interpret this in very different ways. None of the information we have suggests that Google bombarded parliamentarians with twitter storms and with tens of thousands of emails. The initiative #saveyourinternet was responsible for most of the lobbying. (Further information on the curious background of this hashtag campaign is given in this article.)  What is relevant here is that Julia Reda backed this initiative in a tweet sent out shortly before the conference began.

Screenshot: Tweet sent by Julia Reda on 21 September, 2018

So on the one hand, we see Julia Reda requesting that her supporters write to EU parliamentarians personally (to dispel the impression that “it is coming from Google”) and on the other hand, we see her speaking out in favor of the initiative #saveyourinternet that had, over the summer, left parliamentarians whose inboxes and twitter accounts had been flooded with messages with the impression “that this is from Google.”

So just how are Google and the #saveyourinternet campaign connected? Does Julia Reda have more information or information that differs from what is in the public sphere?

The EU Transparency Register: As opaque as milk

The EU Transparency Register contains an entry on Google which lists 24 associations Google belongs to as a member. These include CCIA, one of the main sources of funding for the Copyright for Creativity (C4C) ad-hoc coalition behind the #saveyourinternet campaign. (We have reported on them previously here).

But the transparency offered by the register is quite restricted. Organizations Google Inc. belongs to are listed, but additional subsidiaries like Google Germany GmbH are not.
As Google Germany has no entry in the EU register, the register does not contain information on organizations and associations that are supported at national level by Google subsidiaries and may thus be far more dependent on Google than if only a single Google membership existed.

Organizations falling into this category that are C4C supporters include:
CDT – Center for Democracy & Technology
IGEL – Initiative gegen ein Leistungsschutzrecht
OFE – Open Forum Europe

The organizers of #saveyourinternet – the lobbying company N-square, which organized the campaign on behalf of C4C, and N-square’s parent company KDC – are not represented transparently in the EU register, just as they were not represented transparently on their campaign website. N-square has an entry in the transparency register that specifies financing of less than EUR 9,999 with Google in 2016 and mentions that N-square is part of the KDC group. The KDC Group, which also has Google and CDT as customers is not mentioned further in the register. Ultimately, it seems highly likely that Google is far more important for KDC/N-square than the rather low financing amount the register reflects.

Screenshot: KDC Website with customers like Google and CDT

As only partial listings are available for certain relevant entities, the EU transparency register can only hint at the connections between Google and the #saveyourinternet campaign. Perhaps looking beyond the borders of the EU will shed more light on affairs.

Oh, how beautiful is Canada

As mentioned in this articlefrom 27 July 2018 and this articlefrom 3 August 2018, the Canadian enterprise OpenMedia was one of the major initiators and drivers of the #saveyourinternet campaign.

OpenMedia is now also preparing to go on the warpath once more; the “battle” over Article 13 of the directive is clearly not yet over. In the OpenMedia newsletter released shortly after the September vote, the company announced its intention to increase pressure on individual EU member states.

Illustration: Extract from the OpenMedia newsletter from 14 September, 2018

The anti-campaign is also referenced on OpenMedia’s website.

Illustration: Screenshot of the OpenMedia website on 13 October, 2018. The link shown is, however, broken.

Now, to be crystal clear about this, OpenMedia is a Canadian company. So here we have a Canadian company announcing that it will exert pressure on EU member states to get the EU to change its laws in a way that suits a Canadian company. The situation is absurd, and whether the EU and its parliamentarians will appreciate such external meddling in their policymaking seems questionable.

When “open” means anything but

Let us take a closer look at OpenMedia.

OpenMedia was founded in 2014. The former Google policy manager Jacob Glick sits on its board.

Illustration: Screenshot from the OpenMedia Website (OpenMedia’s Board).

Transparency is a core value of the enterprise.

Illustration: Screenshot from the OpenMedia Website (Transparency).
“We are constantly seeking ways to be more open…”

Nevertheless, anyone currently seeking transparent information on Open Media’s funding is in for a difficult time.
None of the financial statements for the years 2014–2016 can now be called up on the OpenMedia website.

Illustration: Error message on the OpenMedia Webseite on attempting to call up a financial statement

So much for OpenMedia’s “open approach” and emphasis on transparency.

Sponsorship magic

On its website, OpenMedia gives at least a glimpse into where some of its revenue comes from. The enterprise has sponsors. The platinum sponsorship category encompasses those sponsors contributing more than 20 000 Canadian dollars. How much more is not clear, and whether these payments are one-off or repeated is not spelled out. The annual reports could clarify this – if only they were available.

During the summer of 2018, something rather odd happened to this list of sponsors.

In July 2018, 8 enterprises or individuals were still listed as platinum sponsors. These included the Mozilla Foundation and The Office of the Privacy Commissioner of Canada, a body comparable with European data protection authorities.

Illustration: The list of platinum sponsors from July 2018

By October 2018, the number of platinum sponsors had (magically?) shrunk.

Illustration: The list of platinum sponsors in October 2018

Now only five entities are listed as platinum sponsors. In the absence of greater transparency, we can only speculate as to why: did sponsorship agreements elapse or was there another reason? The Canadian Privacy Commissioner and the Mozilla Foundation have now been removed from the list. Was being listed as sponsors unpleasant for them? It is, after all, somewhat bizarre to think of Canadian taxpayers’ money being used to influence EU policy and the work of EU parliamentarians, not least by flooding the latter with spam emails.

 

OpenMedia and New/Mode – Which came first, the chicken or the egg?

Tools from the Canadian enterprise New/Mode were – provably– used on various pages in the #saveyourinternet campaign during the summer of 2018. The use of such tools ensured that the offices of EU parliamentarians were kept busy deleting identical e-mails with the same content and dealing with Twitter accounts stuffed with messages for weeks on end.

Up to the summer of 2018, the OpenMedia website still stated that New/Mode Inc. was a subsidiary of Open Media. That information has now been removed from the website and now, in October 2018, the relationship between the two companies is now suddenly described entirely differently, with OpenMedia now appearing to be a subsidiary of New/Mode!?

Illustration:  Screenshot from New/Mode website – “About Us” section.

This change seems to have been made in a rather slipshod manner, however, with New/Mode still being described as an offshoot of Open Media elsewhere.

Illustration: Screenshot from New/Mode website. The organization is described as an “offshoot” of OpenMedia.

The OpenMedia annual report clarifies the situation somewhat. Fortunate are those who managed to download it before it disappeared from the OpenMedia website! It is clear from the 2016 financial statement that OpenMedia lent 50 000 Canadian dollars to New/Mode in 2015. This loan was to be repaid on 3 September, 2016. The repayment date was subsequently rescheduled to 30 June, 2018. But ultimately Open Media received shares in New/Mode in place of the repayment in 2015.

Illustration: Extract from the audited annual report of OpenMedia 2016, which is now no longer available on the OpenMedia website

Why is the ownership of the company not communicated clearly and plainly? What are the presumed advantages of such contradictory and opaque communication?

Conclusion

Julia Reda’s fears that suspicions that Google is behind the campaign could arise certainly do not seem entirely unfounded. Google’s membership in one of the main funding sources for the campaign’s operator, the only partially transparent relationship between Google, this lobbying agency and its parent, and finally the personal and financial ties between Google and one of the Canadian lobby groups all combine to create this impression. The picture is further rounded out by the opaque nature of the partnerships linking local Google companies to initiatives that then pool their resources in Europe in ad-hoc coalitions like C4C.

While the new EU Copyright Directive has surmounted a first hurdle with the adoption of a text in the European parliament, the legislative procedure is still wide open. Numerous groups are now attempting to influence the trilogue negotiations by lobbying individual countries on the European Council. We will soon see whether national parliamentarians will now also be subjected to email avalanches and twitter storms by opponents of the directive.Their EU colleagues can certainly tell them much about how such lobbying campaigns unfold.

Perhaps the most shocking aspect of this entire episode has, however, been the brazenness with which interest groups outside the EU and non-EU enterpriseswith opaque ownership and funding structures have mounted an assault on the legislative bodies of the EU. This is asymmetrical lobbying of a very particular kind. One can only hope that the EU analyzes the events of this summer precisely and ensures that such attempts to exert influence and manipulate voting are not repeated in the run-up to the final vote on the new directive in the European parliament. The EU is already keenly aware of this problem, and measures to avoid the manipulation of voting have already been determined.

Don’t Get Fooled Again: Piracy is still a big problem-MusicTech.Solutions

Guest post by Chris Castle (from MusicTech.Solutions)

I know it’s not very “modern,” but music piracy is still a huge problem.  As recently as yesterday I had a digital music service executive tell me that they’d never raise prices because the alternative was zero–meaning stolen.  (This demonstrates the downward effect on prices from massive piracy that David has noted many times on the Trichordist.)

Very 1999, but also oh so very modern as long as Google and their ilk cling bitterly to their legacy “safe harbors” that act like the compulsory licenses they love so much.  Except the safe harbor “license” is largely both royalty free and unlawful.  Based on recent data, it appears that streaming is not saving us from piracy after all if 12 years after Google’s acquisition of YouTube piracy still accounts for over one third of music “consumption.”  The recent victory over Google in the European Parliament indicates that it may yet be possible to change the behavior of Big Tech in a post-Cambridge Analytica world.

It’s still fair to say that piracy is the single biggest factor in the downward and sideways pressure on music prices ever since artists and record companies ceded control over retail pricing to people who have virtually no commercial incentive to pay a fair price for the music they view as a loss leader.  The current thinking seems to be that streaming will save us by having more users subscribe to music services at a price that reflects the market distortion of massive piracy.  In other words, less is more–the revenge of Chris Anderson.  Except now we are to treat the head of the tail as though it were the long tail.

On the other hand, if the Googles of this world were living up to their ethical responsibilities that should be the quid pro quo for the profits they make compared to the harms they socialize, then you wouldn’t see numbers like this chart from Statistica derived from IFPI numbers:

The good news is that there is a solution available–or if not a solution then at least a more pronounced trend–toward making piracy much harder to accomplish.  It may be necessary to take some definitive steps toward encouraging companies like Google, Facebook, Twitch, Amazon, Vimeo and Twitter to do more to impede and interdict mass piracy in return for the safe harbor they love so much and misuse every day.

Private Contracts:  It may be possible to accomplish some of these steps through conditions in private contracts that include sufficient downside for tech companies to do the right thing.  That downside probably should include money, but everyone needs to understand that money is never enough because the money forfeitures are never enough.

The downside also needs to affect behavior.  Getting Google to change its ways is a tall order.  Witness Google’s failure to comply with their nonprosecution agreement with the Criminal Division of the Department of Justice for violations of the Controlled Substances Act.  When the United States failed to enforce the NPA against Google, Mississippi Attorney General Jim Hood sought to enforce Mississippi’s own consumer protection statutes against Google for harms deriving from that breach.  Google sued Hoodand he ended up having to fold his case, even though 40 state attorneys general backed him.

Antitrust Actions:  Just like Standard Oil, the big tech companies are on the path to government break ups as Professor Jonathan Taplin teaches us.  What would have been unthinkable a few years ago due to fake grooviness, the revolving door and massive lobbying spending all over the planet, in a post-Cambridge Analytica and Open Media world, governments are far, far more willing to go after companies like Google, Amazon and Facebook.  At least in Europe where fines against Google for competition law violations exceed $5 billion.

Racketeer Influenced and Corrupt Organizations Act Civil Prosecutions:  “Civil RICO” claims are another way of forcing Google, Facebook, Amazon & Co. to behave.  Google is fighting a civil RICO action in California state court.  Civil RICO may be a fertile solution against one or more of Google, Facebook and Amazon.

As we know, streaming royalties typically decline over time due to the fact that the revenues to be divided do not typically increase substantially (and probably because of recoupable and nonrecoupable payments to those with leverage).  At any rate, the increase in payable revenues is less than the increase in the number of streams (and recordings).

While it’s always risky to think you have the answer, one part of the answer has to be basic property rights concepts and commercial business reality–if you can’t reduce piracy to a market clearing rate, you’ll never be able to increase revenue and music will always be a loss leader for immensely profitable higher priced goods that artists, songwriters, labels and publishers don’t share be it hardware, advertising or pipes.

I strongly recommend Hernando de Soto’s Mystery of Capital for everyone interested in this problem.  The following from the dust jacket could just as easily be said of Google’s Internet:

Every developed nation in the world at one time went through the transformation from predominantly extralegal property arrangements, such as squatting on large estates, to a formal, unified legal property system. In the West we’ve forgotten that creating this system is what allowed people everywhere to leverage property into wealth.

What we have to do is encourage tech companies to stop looking for safe harbors and start using their know-how to encourage the transformation of the extralegal property arrangements they squat on and instead accept a fair rate of return.  My bet is that this is far more likely to happen in Europe–within 30 days of each other we’ve seen Europe embrace safe harbor reform in the Copyright Directive while the United States welcomed yet another safe harbor.

If we’re lucky, the European solution in the Copyright Directive may be exported from the Old World to the New.  And if Hernando de Soto could bring property rights reform to Peru in the face of entrenched extralegal methods and the FARC using distinctly American approaches to capital, surely America can do the same even with existing laws and Google.

Arithmetic on the Internet: The Ethical Pool Solution to Streaming Royalty Allocation

Guest post By Chris Castle

“Sick of my money funding crap.”
A Fan’s Tweet

Subscription services are one of the few secular trends in the current economy that is not yet reactive to trade wars or interest rates.  Subscription services are found in many areas of the economy, but music drives some of the big ones like Spotify, Amazon and especially the razor-and-razorblades plays like Apple.  But per-stream royalties do not come close to making up for the CD and download royalties they cannibalize.   Not only do subscription retail rates need to increase, but it’s also time for a major change in the way artist’s streaming royalties are calculated from what is essentially a market share approach to one that is more fair. 

Artists’ dismal streaming royalties on music subscription services are largely based on a simple calculation:  A per-stream payment derived from a share of the service’s revenue prorated by number of streams.  Artists get a portion of a service’s monthly revenue (at least the revenue the service discloses) based on a ratio of your plays to all the plays.  Your plays will always be a lot smaller than the total plays.  (This is essentially what Sharky Laguana referred to as the “Big Pool.”)

Sounds simple, but mixed with the near-payola of Spotify’s playlist culture and Pandora’s “steering” deals, it’s really not.  Negotiating leverage allows big stakeholders to tweak the basic calculation with floors, advances (aka breakage), nonrecoupable payments that help cover accounting costs, and other twists and turns to avoid a pure revenue share.

It also must be said that stock analysts and venture investors always—always—blame “high” royalties for loss-making in music services.  This misapprehension ignores high overhead such as Spotify’s 10 floors of 4 World Trade Center or high bonus payments such as Daniel Ek’s $1,000,000 bonus paid for failing to accomplish half of his incentive goals stated in the Spotify SEC documents (p. 133 “Executive Compensation Program Requirements”).

Of course all these machinations happen behind the scenes.  Fans are not aware that their subscription pays for music they don’t listen to and artists they never heard of or don’t care for.   Plus, it’s virtually impossible for any label or publisher to tell an artist or songwriter what their per-stream rate is or is going to be.

Fans Don’t Like It:  A New Wave of Cord Cutters?

So neither fans nor artists are happy with the current revenue share model. Given that the success of the subscription business model is keeping subscribers subscribing, the last thing the fledgling services need are cord cutters.

Many artists will tell you that the playlist culture and revenue share model are destructive.  Dedicated fans often don’t like it  either (after they understand it) because it gives the lie to supporting your favorite artist by streaming their music.  Artists don’t like it because unless you have a massive pop or hip hop hit, all you can aspire to is a royalty rate that starts in the third decimal place from the right if not the fourth.  This is compounded for songwriters.   (See Universal Music Publishing’s Jody Gerson on streaming royalties for songwriters.)

Simply put, if a fan pays their subscription and listens to 20 artists in a month, that fan likely believes that their subscription is shared by those 20 artists and not by 200,000 artists, 99.99% of whom that fan never listened to and probably never will, similar to Sharky’s “Subscriber Pool.”

This is why some artists like Sharky Laguana (and their managers) have begun arguing for replacing the status quo with “user-centric” royalties that more directly correlate fan listening to artist payments. I have a version of this idea I call the “Ethical Pool.”  

How Did We Get Here?

How in the world did we get to the status quo?  The revenue share concept started in the earliest days of commercial music platforms.  These services didn’t want to pay the customary “penny rate” (as is typical for compilation records, for example), because a fixed penny rate might result in the service owing more than they made–particularly if they wanted to give the music away for free to compete with massive advertising supported pirate sites.

Paying more than you make doesn’t fit very well with a pitch for a Web 2.0, advertising driven model:  All you can eat of all the world’s music for free or very little, or “Own Nothing, Have Everything,” for example.  It also works poorly if you think that artists should be grateful to make any money at all rather than be pirated.

Revenue share deals for big stakeholders have some bells and whistles that leverage can get you, like per-subscriber minimums, conversion goals, top up fees, limits on free trials, cutbacks on “off the top” revenue reductions, and the percentage of revenue in the pool (50%—60%-ish).  Even so,  the basic royalty calculation in a revenue share model is essentially this equation calculated on a monthly basis:

(Net Revenue * [Your Streams/All Streams])

Or ([Net Revenue/All Streams] * Your Streams)

In other words all the money is shared by all the artists.

Sounds fair, right?

Wrong.  First, all artists may be equal, but on streaming services, some are more equal than others.  Regardless of the downside protection like per-subscriber or per-stream minima, the revenue share model has an inherent bias for the most popular getting the most money out of the “Big Pool.”  (This is true without taking into account the unmatched.)

And of course it must be said that the more of those artists are signed to any one label, the bigger that label’s take is of the Big Pool.  So the bigger the label, the more they like streaming.

Conversely, the smaller the label the lower the take.  This is destructive for small labels or independent artists.  That’s why you see some artists complaining bitterly about a royalty rate that doesn’t have a positive integer until you get three or four decimal places to the right.  Why drive fans away from higher margin CDs, vinyl or permanent downloads to a revenue share disaster on streaming?

Yet it increasingly seems that we are all stuck with the nonsensical streaming revenue share model.

Do Fans Think It’s Wrong?

There’s nothing particularly nefarious about this—them’s the rules and rev share deals have been in place for many years, mostly because the idea got started when the main business of the recorded music business was selling high margin goods like CDs or even downloads.  Low margin streaming didn’t matter much until the last couple years.

It was only a question of time until that high margin business died due to the industry’s willingness to accept fluctuating micropennies as compensation for the low-to-no margin streaming business.  (I say “no margin business” because the costs of accounting for streaming royalties may well exceed the margin—or even the payable royalty—on a per-stream basis when all transaction costs are considered as Professor Coase might observe.)

So understand—the revenue share model is essentially a market share distribution.  Which is fine, except that in many cases, and I would argue a growing number of cases, when the fans find about about it, the fans don’t like it.  They pay their monthly subscription fee and they think their money goes to the artists they actually listen to during the month.  Which is not untrue, but it is not paid in the ratio that the fan might believe.  Fans could easily get confused about this and the Spotifys of this world are not rushing to correct that confusion.

Here’s the other fact about that rev share equation: over time, the quotient is almost certain to produce an ever-declining per-stream royalty.  Why? 

Simple.

If the month-over-month rate of change in revenue (the numerator) is less than the month-over-month rate of change in the total number of streams or sound recordings streamed on the service (the denominator), the per-stream rate will decline over those months.  This is because there will be more recordings in later months sharing a pot of money that hasn’t increased as rapidly as the number of streams.

As the number of recordings released will always increase over time for a service that licenses the total output of all major and indie labels (and independent artists), it is likely that the total number of recordings streamed will increase at a rate that exceeds the rate of change of the net revenue to be allocated.  If there are more recordings, it is also likely that there will be more streams.  (For example, see “Despite Record Revenues, Spotify’s Payouts to Artists and Labels Continue to Decline” in Digital Music News.)

So streaming royalties in the Big Pool model will likely (and some might say necessarily will) decline over time.  That’s demonstrated by declining royalties documented in The Trichordist’s “Streaming Price Bible” among other evidence.

Thus the fan’s dissatisfaction with the use of their money is already rising and is likely to continue to rise further over time.

User-Centric Royalties and the Ethical Pool

How to fix this?  One idea would be to give fans what they want.  A first step would be to let fans tell the platform that they want their subscription fee to go to the artists that the fan listens to and no one else.  This is sometimes called “user-centric” royalties, but I call this the “Ethical Pool”.

When the fan signs up for a service, let the fan check a box that says “Ethical Pool.”  That would inform the service that the fan wants their subscription fee to go solely to the artists they listen to.  This is a key point—allowing the fan to make the choice addresses how to comply with contracts that require “Big Pool” accountings or count Ethical Pool plays for allocation of the Big Pool. 

Artists also would be able to opt into this method by checking a corresponding box indicating that they only want their recordings made available to fans electing the Ethical Pool.  The artist gets to make that decision.   Of course, the artist would then have to give up any claim to a share of the “Big Pool.”

Existing subscribers could be informed in track metadata that an artist they wanted to listen to had elected the Ethical Pool.  A fan who is already a subscriber could have to switch to the Ethical Pool method in order to listen to the track.  That election could be postponed for a few free listens which is much less of an issue for artists who are making less than a half cent per stream.

The basic revenue share calculation still gets made in the background, but the only streams that are included in the calculation are those that the fan actually listened to.  If the fan doesn’t check the box, then their subscription payment goes into the market share distribution as is the current practice, but their musical selection is limited to “Other than Ethical Pool” artists.

That’s really all there is to it.  The Ethical Pool lives side by side with the current Big Pool market share model.  If an Ethical Pool artist is signed, the label’s royalty payments would be made in the normal course.  The main difference is that when a subscriber checks the box for the Ethical Pool, that subscriber’s monthly fee would not go into the market share calculation and would only be paid to the artists who had also checked the box on their end.

One other thing—the subscription service could also offer a “pay what you feel” element that would allow a fan to pay more than the service subscription price as, for example, an in-app purchase, or—clasping pearls—allow artists to put a Patreon-type link to their tracks that would allow fans to communicate directly with the artist since the artist drove the fan to the service in the first place.  I’ve suggested this idea to senior executives at Apple and Spotify but got no interest in trying.

The Ethical Pool is real truth in advertising to fans and at least a hope of artists reaping the benefit of the fans they drive to a service.  There are potentially some significant legal hurdles in separating the royalty payouts, but there are ways around them.

I think the Ethical Pool is an idea worth trying.

 

“Totally Pissed Off” By Big Tech Spam EU Gives Artists A Copyright Victory

Start at 14:45:10 

You HAVE to watch this.  When asked why EU Parliament switched from opposing the copyright directive to overwhelmingly supporting it, German MEP Helga Truepel pulls no punches:

“I think it’s due to this message spamming campaign. I talked to some of my colleagues here [and they] are totally pissed off, cause in the streets there were a maximum 500-800 people last sunday… and we were only deleting emails for weeks now.”

We told you two months ago. This was not a normal lobbying campaign. It would seem that the EU Parliament agrees that Big Tech lobbying campaign crossed the line.  For it is now clear the vote for the copyright directive was about much more than copyright.  It became a referendum on the scummy (and possibly illegal) tactics that big tech has been using for years. SOPA, SESTA, PIPA, ACTA, US Copyright Office consultations, TPP, Net Neutrality, and Canada’s NAFTA negotiations have all seen government officials targeted with massive spam and disinformation campaigns orchestrated by Big Tech and carried out by their shadowy astroturf groups.

It’s a great day when you get to watch a democracy stand up to these arrogant Big Tech assholes and say “You have to play by our rules.”  And really mean it.

Thank you MEP Truepel.  They’ve been getting away with it for too long.

Botocracy: #SaveYourInternet Tweets to EU MEPs Peak After 1:00 AM Local Time

This is a real simple story.  There are a number of tools one can use to count the frequency of hashtags on twitter.  One is Keyhole.  There are many other great services.  But they will all tell you this:  Tweets with #SaveYourInternet hashtags appear to be at highest level in days. The only problem is it’s 2:00 AM in Brussels.  Does this seem like organic traffic to you?  (Display is set to US East Coast +6 hours for Brussels).

30.43% of all traffic today came from the US.  SaveYouInternet.eu sent the most traffic.  SaveYourInternet.eu is a website managed and controlled by N-Square. They are of course Google’s lobbyists in Brussels.  This looks to be Google spamming the EU with with tweets.  Don’t you agree?

Here are the two principals at N-Square.  The EU should make them come to EU Parliament and answer questions about their activities.

And just to be safe call this guy in.  Kent Walker, Google’s Senior Counsel.  You might want to ask him if their shenanigans in the EU are really about the copyright directive or are retaliation for the big antitrust fine the EU levied on Google.  Not saying they are. But what would it hurt to ask? You know, “clear the air.”